Tips for your first investment property
Only around 8% of Australians have an investment property, so owning one is a notable achievement.
Buying and managing a rental property can be a daunting experience but the process can be simple and profitable if you have the right knowledge.
Here are a few tips to succeed as a landlord.
- Know the law
If you are going to manage a property yourself, knowing what you can and can’t do is integral. You have certain rights and responsibilities as a landlord which you need to be aware of. If something goes wrong, or you are unlucky with difficult tenants, following the right procedure will avoid costly expenses or unnecessary legal action.
You can download a free renting guide for tenants from Consumer Affairs Victoria.
- Present your property
If you present a clean and well-maintained property, you are likely to attract tenants who will maintain and look after your property. Simple things like a new coat of paint, thorough cleaning and a neat garden can go a long way to attracting the right sort of clients, and making your property stand out in the market.
- Carefully pick your tenants
Successful investment properties depend on good tenants. Bad tenants can be costly and give you a lot of headaches and stress, whereas good tenants will be stress free and keep your property in good condition. Taking the time to check a potential tenant’s rental and employment history will give you an idea of what kind of tenant they will be. If they have a history of damaging property or being late with rental payments, it’s best to find someone else.
- Maximise rental return
Rent is the revenue of your investment business, and you should therefore make sure you are charging the right amount. Keep an eye on the average rent in your area, and adjust your price as demand increases. Ensuring that tenants pay on time is also important so you can meet all the expenses related to your rental property.
- Consider alternative income
It’s easy to set up a property and then forget about it until the end of the rental lease, but there are some other options you could consider:
- Short term leasing (AirBNB) – potential for higher income but also requires more work
- Long term, furnished housing – if you find the right tenant they could provide you with guaranteed income
These are just some ideas, and they might not suit all properties, but it’s important to consider all your options.
- Don’t overspend on renovation
More money spent on renovating your property doesn’t necessarily translate to more rental income. The best way to see what needs to be done to increase your rental yield is to check out similar properties in the area, how much they charge, and what’s the difference between your property and theirs.
It’s easy to spend a lot of money fixing your property, but not everything you do will increase the value of your property. Focus first on any maintenance issues and simple things like fresh paint and clean carpets. Small things can make a big difference.
- Hire a property manager
Managing a property has the potential to suck up a lot of your free time. It might be worth hiring a property manager who has expertise in managing properties, dealing with difficult tenants, and maximising rental returns. This will save you a lot of time and energy, and you will have someone to give you advice on running a successful investment portfolio, and someone to take care of things if something goes wrong.
- Inspect your property regularly
Inspecting your property every 6 months will allow you to stay on top of any maintenance issues, and allow you to evaluate if your tenants are adhering to your rental agreement. You should consider how your tenants are treating your property before you agree to extend their lease. It is perfectly reasonable to let your tenants know you will be coming to inspect your property, so you shouldn’t feel like you’re imposing. It is your property after all.
Having a good marketing plan will give you lots of potential tenants to choose from and prevent your property from being vacant for too long. Invest in good quality, professional photos, and source an accurate and favourable description of your property and you will have the best chance at attracting good tenants quickly.